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A New Way to Pay

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I n December, London-based YES-wallet launched Pouch, a mobile and web-based digital wallet that will support near field communication (NFC) payments. With NFC, a customer retains payment card information on her smartphone that can be transmitted to make a payment when she holds her phone near a point of sale terminal that has been equipped with a special reader. The payment is then converted at a call center and routed through existing payment networks.

Pouch will be promoted to retailers worldwide through YES-Wallet’s sales offices in Europe and North America. STORES recently spoke to Simon Curtis, COO of YES-wallet, about this new offering.

What is Pouch and how did it come about?
We have had a web-based digital wallet that facilitated online shopping in operation for about two years. Now, we have developed that platform so that it can also support mobile phone payments made through NFC. Using Pouch, customers can make payments through their smartphones for free. Pouch supports the storage of personal credit, debit and prepaid cards on BlackBerry, iPhone and Android phones.

What are the advantages of this system?
All the functionality of our digital wallet that customers already use to make purchases on the web is now available through mobile phones to make purchases at participating retailers. Retailers not only have a new means of accepting payments from customers, but they can also use this platform to offer store-branded discounts, digital coupons, loyalty programs and location-based mobile advertising and marketing services. It also gives retailers the ability to access reports about the success of these programs by going online.

What do retailers need to do to accept payments through Pouch?
First, retailers will need to invest in NFC technology so that they are able to accept payments from smartphones. This movement will be driven by retailers, and many will make the investment when the time is right to replace their existing point of sale hardware.

Second, retailers will need to wait until there is a base of consumers who have phones that support NFC. We believe there will be a big growth in this [area] in the second quarter of 2012. Already, retailers can accept payments and promotional codes from mobile phones by scanning barcodes located on the phones, but the real advantage comes when they can utilize NFC.

What other functionality is there?
Pouch allows for phone-to-phone sales as well. In a physical store, a store manager or sales representative can accept an NFC payment on their mobile phone in the middle of the store aisle and transfer the sale to the store POS device to be submitted for authorization. This allows customers to pay right in the middle of the store without going to checkout.

We believe there are a lot of retailers that would like to offer a mix of both in-aisle sales as well as sales at fixed POS points. The ability to make a phone-to-phone sale would help small concession stands in malls or other locations. It would also facilitate the ability to accept payments for home service providers and other service providers working in the field.

Is this secure?
At its PCI-DSS certified data centers, Pouch converts phone data back into card details before forwarding the card authorization request to the merchant’s card acquirer.

How will you get this functionality into the hands of the consumer?
The program is free of charge to consumers. The application can be easily downloaded from the apps section on smartphones. We expect retailers to lead the way in getting consumers to make these downloads by promoting the service to their customers. There will be a mix of retailers participating in this program, but we believe the very large chains with strong store brands will want to promote the program heavily.

Retailers will want a store-branded wallet that includes their loyalty card and coupons. There will be a lot of value to them in pushing these programs to the customers’ phones. Likewise, banks have their own wallets and will want to come at promoting this from different angles.

What are the on-going costs involved in this program for retailers?
We operate the program on the behalf of the retailers. We provide all of the services for a monthly subscription fee. That fee is determined on the basis of a store’s transaction volume.